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tv   Journal  PBS  December 8, 2011 6:00pm-6:30pm PST

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>> hello and welcome to the "journal." eu leaders meet in brussels for a key summit that is considered one of the most crucial in the block's history. european leaders to solve the debt crisis. >> the russian prime minister accuses the u.s. of provoking election protests in his country.
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financial institutions have started their working dinner in brussels ahead of the meeting that is being called the do-or- die summit. at stake -- the stability of the eurozone. in the works -- a plan for solving the debt crisis. a few hours ahead of the summit, a key center right eu leaders got together in marseille to coordinate their strategy. >> the document in sarkozy for's hants could hold the plans for saving the euro. he and german chancellor merkel have come to get -- to the summit with a proposal, and they are determined not to leave until they get what they want. >> the key outcome for me is that the euro can only regain its credibility if we amend european treaties in such a way that we move toward instability union. >> but opinions on how to achieve that differ, and the euro skeptics british are already threatening a veto. >> we need obviously to get the
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stability in the eurozone that is good for european countries, good for britain as well, but also, we need to protect britain's's interests. >> but britain does not have the euro and it looks like eurozone members are willing to go it alone. >> the 17 euro member states have a common currency. the ties between them are deeper than the ties between the 27 eu member states, but of course, we will only make changes to the treaties for the 17 eurozone states if we cannot get all 27 to go in the same direction. >> chancellor merkel has indicated that that could be housings pan out. she told reporters that eurozone leaders were already planning a news summit, just for the 17 euro member states. >> just a short while ago, i asked our correspondent, who is following these events or as in brussels, if this summit really means make or break for the eurozone. >> you are beginning to think it has to be. everyone is talking the talk. can they walk the walk?
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this is the eight summit on this subject this year as chancellor, there have been plenty of words. can there be deeds? i do get the sense to not of a real mood of determination to get to grips for this, but we have said that before as well. can they deliver? the differences are as great as ever, but i do think the world is watching, and everything is being carefully choreographed. it is no accident that one of the key credit rating agencies warned that europe's triple a rating, the eu as a whole, might be under review. it is all being designed to bring this summit to some kind of real sense of urgency. that is the feeling genuinely that i'm getting tonight. >> tell us more about the measures being proposed to enforce budget discipline. >> quite draconian measures if you follow the merkel-sarkozy route. automatic sanctions against any countries which fall out of debt and deficit, criteria that will
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be imposed -- in other words, a huge move to the center of national sovereignty over economic policy. it is what you might say the single currency implied all along, but it has never happened. now, it is due to happen. but that is not the only plan on the table. the chairman of the meeting has a different strategy, when he says will not require a treaty change. that is what chancellor merkel once, and that will be difficult. there is a lot to talk about over dinner and again tomorrow and possibly into the weekend if we take heed of the hands from chancellor merkel herself about having cleared her diary for saturday and sunday. and how optimistic are leaders that they will find agreement among the other 27 members? >> i think the 17 -- certainly france and germany want to have the sense of urgency spread to the others, but as chancellor merkel says, if the others, the 10 outside the eurozone, do not want to play ball, the 17 will go ahead, and we will see a
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completely new dynamic in europe. perhaps a genuine two-tier europe for the first time. >> we thank you very much for that update. >> i will be speaking to jeff later on in the program as we look more at the summit currently under way in brussels. exxon it over to monica. >> a bit more on the european central bank. jeff made already mentioned. the european central bank announced today it was lowering interest rates to just 1%. this is the second time in two months it has lowered the cost of borrowing for banks in the eurozone. the inuit puts interest at the same level of may of last year as the debt crisis in the eurozone picked up momentum. lending rates crept up steadily and began easing last month. the ecb rate is key for all nations using the euro. ecb also announced today that it was not planning on a wholesale purchasing of u.s. government bonds, which disappointed
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investors and sent stocks lower. >> ecb president mario draghi is under enormous pressure. while politicians are struggling to craft reforms at the summit in brussels, calls are growing for the ecb to support ailing member states by buying up their government bonds. draghi wants none of that. >> we have a treaty, which says no monetary financing to governments. >> but eurozone banks will be able to borrow unlimited amounts of ultra cheap money for the next three years. the aim is to make it easier for them to lend to industry. if they fail to do that, any hopes of growth would be even more endangered than they already are. but draghi was short on optimism. >> the intensify financial market tensions are continuing to dampen economic activity in the euro area, and the outlook remains subject to high
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uncertainty and substantial downside risk. >> the euro and the eurozone remain in critical condition. draghi said politicians need to make clear decisions and implement them swiftly to regain investor confidence. now it is over to european leaders to forge out a deal. the decision shows that the ecb bowed to political pressure, but it shows as well that it defends its independence, but can help banks at the same time. >> of europe's banking regulator, the eba, spotlighted a huge capital shortfalls in some of the eu's key banks here the latest stress tests show that banks across europe need to boost reserves by some 115 billion euros to withstand a future economic crisis. >> no one expected this installment of the european banking authority's so-called stress test to be easy, but the result was still surprising for german banks. many of the institutions surveyed were unable to produce
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the required 9% capitalization quota. more than half of them, in fact, failed to meet the standard. together, these banks need about 13 billion euros to withstand an economic crisis without government help. the bank in germany needs over 5 billion euros in additional capital. deutsche bank needs more than $3 billion. other banks now considered undercapitalized include the dz bank. the german banks now must come up with a plan to raise more capital in the coming and have it on their books by next summer. >> as can be expected, stress test results did not go down well on the trading floor. >> the big banks within the german stock index 10 deeply in the red in afternoon trading. after the stress tests, the bank
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will try to sell assets at a large scale in order to meet the new stricter capital requirements. but many pessimists predict that the banks will find it very difficult to get the prices they want. that they will have to settle for fire sale prices. what also scared off some investors this thursday was mario draghi's clear rejection of an enlarged bond buyback program. the generous financial assistance that the ecb president did announce were not enough for some investors. >> let's get a closer look at we begin in frankfurt with germany's blue-chip dax ended across the atlantic, dow jones industrials also trading in negative territory. on currency markets, the europe
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of trading for $1.3339. german investigators have obtained a letter in which a group calling itself the informal anarchist federation claims responsibility for a letter bomb sent to deutsche bank's ceo pirie the letter was written in italian and suggests two other bombs may also have been sent. the bomb was received at deutsche bank was a federal headquarters on wednesday. threats -- >> that is right. german authorities have arrested a man they say was planning a bomb attack. special forces took the 27-year- old man into custody thursday afternoon. they say he was part of an al qaeda sell. three other members of the group were arrested in april. police say those arrests deterred a terror attack, but they say the suspect arrested today had continued with a plan, which included blowing up a
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christmas market filled with shoppers. investigators did not, however, find any explosives or weapons in his possession. a short while ago, we asked our political correspondent how serious the islamist terror threat is here in germany. >> i think it continues to be serious. the government had repeatedly warned in recent years that there is a credible if non- specific islamist terror threat in germany. the interior minister said he is very pleased by the operation, but it does show the continuing danger that islamist terrorists pose. and, of course, there have been addressed. one thinks of the two u.s. service personnel killed in frankfurt earlier this year. a man is being tried for that now. a similar group of four men who were planning a car bomb attack in germany, who were sentenced to lengthy jail terms just last year.
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the threat remains even if, in this case, there was no concrete target as far as we know. >> thank you very much for that update. russian prime minister vladimir putin is accusing the u.s. secretary of state hillary clinton of provoking the unrest surrounding last weekend's election. it is the first time he has commented on the unrest that has gone on nonstop since monday. protesters claim sunday's parliamentary poll was rigged by putin's united russia party. >> russia's security forces say they are prepared, should more protests erupt. the kremlin has deployed to strategic areas around the city. the increased presence is an outward show of strength. after days of silence, prime minister putin finally, did on the protests. >> u.s. secretary of state hillary clinton said the election was not free or fair
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before the electoral commission and even published its report. these comments served as a signal to certain actors here to begin the protests. >> speaking to a roomful of supporters of his bid for the presidency, putin warned that prolonged protest could destabilize the country in the long term. according to independent media sources, up to 1000 people are still in custody for protesting alleged election fraud. >> the only reason the people are demonstrating is because they no longer care for putin and his politics. something putin chooses to ignore. in typical soviet manner, he tries to pin the blame on an enemy from the outside. >> authorities say they will allow an opposition demonstration to take place in central moscow on saturday, but the designated area for the
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rally is blocked for construction. >> thousands of protesters in recent days say that putin's brand of stability is actually stagnation. they want change away from the corrupt states, and they believe this is only possible in a russia without putin. >> the clock is ticking down at the united nations climate conference in south africa. delegates have until friday to reach a deal. the talks are aimed at reaching a new agreement to replace the kea of protocol, which runs out at the end of next year. at the center of discussions -- the u.s. and china. they are the world's biggest polluters. many other countries said they will not agree to cutting their own carbon emissions unless the u.s. and china agreed to binding cuts as well. we spoke to our correspondent and asked him to give us the latest at this crucial phase of the summit.
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>> what is actually very interesting to witness here is the new-found self-confidence and assertiveness of the eu and especially germany. at the last two climate change conferences in copenhagen and cancun, the europeans did not really play a major role, and negotiations were dominated by the big players -- u.s. and china. they played their usual blame game, which ended, as we know, in a deadlock, but that deadline might be overcome here in durban, and the europeans are trying very hard to win over china and leave the u.s. basically isolated. they are doing this by offering to endorse a new round of pledges with significantly higher reduction targets. those could move up from 8% to maybe even 30%, but they have one precondition, which is that other big polluters like china, brazil, india, which are not bound by the kyoto protocol right now, agreed to a road map
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which would lead to the legally binding agreement that could take effect no later than 2020, so i think there is a good chance that at least that minimal consensus could be reached. >> we thank you very much. turning now to some golfing news, it was a bad day for germany. he had a poor opening round at the dubai world championship, and he now has no chance of renewing the european top ranking that he held in 2010. the top-ranked player in 2011 could now well be northern ireland's or -- rory mcelroy. if he wins the tournament, he could even unseat england's donald from the top position. "in the arena -- "in depth"
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coming up next. do not go away. >> a woman with a vision -- development of women as economic drivers. she produces high-quality seeds for farmers. she began small, convinced the bank would give her a loan. >> we have to get trucks, so i
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think we are proof to the bank that a woman can be equally competitive. >> give women opportunity. it is not economics. >> welcome back. it is being called a make or break some and it is one of the most important in the history of the european union. leaders are gathering once again to discuss ways of saving the europe. the pressure is on now to reach a deal that will commence market that the eurozone will not break up. french and german leaders will present their latest proposal to have european countries balance their budgets and impose tougher punishments on the rule breakers. whether or not this is enough to stem the crisis remains to be seen. here's more on what is at stake at this latest summit. is this really the end for the common currency? that is what the economist is asking. it is the key question for journalists outside the summit in brussels. once again, readers are in crisis talks.
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standard and poor's has questioned the credit worthiness. in london, investors have not only started pulling money out of greece and italy, but europe as a whole. plans are in place for the possible demise of the euro. chancellor merkel told the german parliament that would be a fatal error. if the euro fails, europe has failed. the same message came from the monetary affairs commissioner in brussels. completed through much deeper integration, or we will have to accept a gradual disintegration. then the debate has moved on from how much money gemini is giving to prop up other countries. the very future of the eu is at stake. as the french president made clear, just ahead of the summit.
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>> never was europe so under threat. never was the danger that europe could implode so great. >> but with europe implode if the euro fell apart? away from the main summit players, we asked around and found that many people are taking a relaxed view. and if you have scrambled eggs, you cannot get the individual eggs back. you cannot have scrambled eggs and then say, "i want my eggs back." >> many politicians feel the same, even if they are reluctant to say so. we asked a leading think tank if the eu would fall apart without the euro. >> competition, the common market, a joint trade, foreign policy and tariffs. all 27 member states have a great interest in that. even the british do not want to see that core part of the european project abolished overnight.
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>> at this stage, no one knows if the summit will bring a solution to the crisis. but for some people at least, there is still a gleam of hope for a brighter future. >> eu leaders agree on the urgency to find a sthe eurozoned pressure is perhaps the greatest on german chancellor angela merkel. the world has looked to germany to lead the way out, and chancellor merkel has said time and again if the euro fails, then europe fails, but at the same time, she has demonstrated what she is not willing to accept -- note to the european central bank as a lender of last resort, for example. merkel believes the way to restore confidence in the eu is through bold fiscal reform. >> angela merkel's preferred route out of the eurozone crisis is very different than the one sought by many of her european partners. she has a clear idea of what the
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brussels summit should achieve but warns against excessive optimism. >> the solution to the eurozone debt crisis is a process, and this process will take years. >> germany says yes to a new treaty, but to discipline, and sanctions for profligate spenders, but note to eurobonds or a banking license for the rescue fund. french believe that is just a return of memnon. . >> the bismarck style is bringing the tradition of german nationalism back to a head. >> the british are also highly annoyed. it by a single sentence, that all of europe was now speaking german. the crisis has forced germany into the role of leader pierre the chancellor wants to push through her german the principles as head of a strong and powerful nation, but tempers her statements. >> it is true that we advocate a
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certain culture of stability and growth, but we are doing so in the european spirit. >> one can find of we're images from germany's past, reflecting the ambivalence of germany's relationship with its ambivalent neighbors. >> one day, the french say the germans want to much influence in europe. but the day after tomorrow, they believe the germans are not doing enough. >> i feared german power less than in beginning to fear german and activity. >> that is a fact that is obviously clear to angela merkel. she knows words alone are not enough. >> ok, well, following all the action for us is our brussels correspondent who joins us now. what is going to finally push eu leaders into action beyond all this talking? >> in a word, fear.
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they need to be really afraid that there is disintegration on the way. they need to think that the eurozone may break up and this huge, monumental iconic policy, the single currency, which was a hell of a creation, just in technical terms, never mind policies and economics -- the need to believe that is in serious danger. i think honestly until now they thought there would be a solution, but they would not throw too much money at it because they might not need to. increasingly, there are signs from outside the eu and inside the eu that there is serious trouble. when people like chancellor merkel and nicholas sarkozy start saying we could be facing integration, if the euro fails, europe fails, i think they are really coming down to the wire. that is what we may be seeing here as the leaders are sitting at dinner and dinner seems likely to be going on for a long time. >> let's talk for a second. do you think the ecb has helped or hindered the process by
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cutting a key interest rate? >> on balance, probably help. there is no doubt this is part of the choreography of this week, which began on monday when the italian prime minister announced more austerity measures, just as part of the jigsaw that is being put together. on balance, i think it is favorable because if they cut interest rates as they have done, then theoretically, at least, it makes it easier for struggling governments to borrow on the open market. i do think that that is a little part of this whole scheme leading up to some sort of grand announcement. it may not even be this weekend. but that is certainly what we are seeing here, slowly, the bits are coming together. someone said to be just now he cannot have a grand slam once and for all big decision result. it is just too late for that. but we want people to appreciate that slowly but surely, we are putting together the measures that will give us long-term structural reforms and stability. >> ironically, from across the
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atlantic, u.s. president barack obama said that europe must muster political will to act on debt. do you think that the will is there? >> i would have said a few weeks ago probably not, but coming back to the point of fear, i think the political will is being forced upon those who are not particularly keen. people are going to act, but bear in mind, the leaders at the summit -- they do not have independent economic experts sitting at their side. they are making political decisions about economic fundamental issues and it is just a question of what they see as most important. chancellor merkel going for overall reform of the economic scene in europe. others just want to deal with day to day debt. but, yes, the political will is clearly there, but it has been forced upon some of the political members around the table. >> thank you. we thank you, as always, for your insight. >> with that, we wrap up the "journal" at this hour.
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thanks for joining us. stay tuned.
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